Governments and regulatory bodies across the world have enforced numerous measures to curb irresponsible lending practices by banks and other credit institutions. These bodies have also taken initiatives to create consumer awareness about prudent borrowing to avoid excess debt. Excessive fees and interest rates on loans, lack of disclosure of products’ terms and conditions, and deceptive debt-collection practices by banks and credit institutions contributed significantly to the financial crisis in the US and other developed economies in 2008–2009. The phenomenon of responsible lending has assumed increased urgency since the global financial crisis, and has become a priority for governments and other regulators in many countries which are increasingly concerned about the consequences of irresponsible practices in the financial sector, particularly in banking.

The US was the country most affected by the financial crisis, and was at the forefront of enforcing responsible lending practices in the banking industry to restore consumer confidence in, and stability to, the industry. In this regard, the government and regulators have implemented several regulations, including the Credit Card Act 2009, the Dodd-Frank Wall Street Reform (widely known as Dodd-Frank) and the Consumer Protection Act in 2010, as well as the Truth in Lending Act, 2010 Regulation Z for property loans. The European Banking Authority, along with a number of European economies such as the UK, Germany and Poland, have also enforced several regulations. Banks and credit institutions are now required to provide customers with understandable information about the risks and benefits of credit products so they can make informed decisions and protect themselves from illicit practices.

The improper marketing and advertising of loans and other financial products encourage reckless borrowing by consumers. Low levels of consumer financial literacy have created an unclear lending situation between lender and borrowers.

The non-availability of guidelines by monetary authorities can sometimes pose a challenge for banks, hindering the successful implementation of responsible lending. A lack of guidelines can lead banks and credit institutions to develop their own measures to comply with regulations.

The growing middle classes in Latin America are driving demand for credit. The strict implementation of responsible lending regulations will decrease NPL rates over the forecast period (2013–2017).

In South Africa, there is a varying pattern of highs and lows in the NPL ratio, suggesting unclear monetary regulation in the country. This is due to continued reckless lending practices by banks, and the unsuccessful implementation of the National Credit Act.

The Asia-Pacific region is at an intermediate level in terms of use of CRM solutions, while it is still a relatively new concept in the Middle-East and Africa. Overall global spending on CRM applications by retail banks reached US$1.9 billion in 2012, accounting for 14.0% of the overall global spending on CRM. Spending is expected to accelerate further over the forecast period (2013–2017), increasing from US$2.1 billion in 2013 to US$3.0 billion in 2017 at a CAGR of 10.10%.

Customer satisfaction has always been a priority for banks and payment companies. With the advancement of technology, rising competition and changing consumer preferences, it has become even more important to have effective customer service and relationship management (CRM) to retain existing customers as well as acquire new ones.

Non-bank payments and financial service (NBPFS) providers are facing difficulties in terms of expanding and defending their market shares, as a result of changes in regulatory dynamics, the economic environment and competitive landscapes. Companies are under pressure to deleverage and seek alternative sources of profit, as key economies remain weak and competition has increased. In this altered environment, a new operating model is needed, one that is rooted in attaining a primary relationship with the customer through the rebuilding of trust and the forging of active customer relationships.

A number of NBPFS providers, both established and new, are setting best-practice examples in capitalizing on technology and their relationships with customers to enhance business potential, despite several hurdles to growth. This report explores key best practices adopted by NBPFS providers to stay competitive in the dynamic world of financial services.

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